Recycling investment forums are events
designed to bring recycling entrepreneurs together with investors, financiers
and economic development officials for their mutual benefit. The design
can be similar to those of the conventional investment forums or meetings
documented in Chapter 5. Recycling investment forums, however, are unique
in their focus on recycling-related companies-ventures that collect, process,
remanufacture, reuse or compost recovered materials.

As of mid-1996, two such forums had been conducted. The Southeastern
Recycling Investment Forum was organized by the South Carolina Recycling
Market Development Advisory Council, within the states Department of
Commerce, and KirkWorks and primarily sponsored by US EPA Region IV.(1)
The forum was held on November 15 and 16, 1995, in Charleston, SC, immediately
prior to Dare to Deal, an annual venture capital conference. (See Figure
4-1 below.)(2) The Northeast Recycling Investment Forum was held in Boston
on May 6 and 7, 1996, organized by the Northeast Recycling Council (NERC)
and primarily sponsored by the EPA New England regional office. Co-organizers
included the Environmental Business Association of New York State, KirkWorks
and the Technology Capital Network at MIT. Future recycling investment
forums are being planned for the Northeast in the spring of 1997, the
Southeast in February 1997 and the Midwest in early 1998. (See Chapter
5 for contact information.)

This chapter provides suggestions on designing and implementing recycling
investment forums. It is based in part on organizing experience from the
two forums noted above. The chapter also includes sections from the Recycling
Venture Forum Study published in June of 1995 and conducted by KirkWorks.
The Study was sponsored by the Recycling Advisory Council of the National
Recycling Coalition, the Northeast Recycling Council, EPA New England
and the New York State Office of Recycling Market Development.

Background

Just as with most small and start-up businesses, recycling entrepreneurs
are discovering that the market for private equity investment or nontraditional
debt is inefficient. Although there are many individual investors, investment
firms, finance companies, intermediaries or other capital sources that
are interested in financing strong recycling ventures, reaching these
investors is a costly and difficult proposition. Similarly, investors
are looking for efficient ways to find new investment opportunities and
accurate information on companies, so as to reduce their marketing and
due diligence costs.

Recycling investment forums promise to help make this financial market
for growing recycling businesses more efficient. Financiers are familiar
with forums and fairs as a means of learning about a range of selected
companies in a particular region. Numerous recycling enterprises are in
the market for new financing, ranging from a hundred thousand to a few
million dollars. Often these companies already are generating sales but
have not yet achieved the history of profitability or track record necessary
for bank financing. They may also be seeking equity capital for aggressive
expansion. Forums can facilitate capital access for recycling companies
by bringing them together with an audience of targeted investors potentially
interested in the size, stage and nature of the investments that the enterprises
are offering.

Charleston, SC-More than 100 entrepreneurs, investors, economic
development officials and other interested parties participated in the
Southeastern Recycling Investment Forum in downtown Charleston
on November 15 and 16, 1995.

Nine entrepreneurial recycling companies
presented their business plans to forum attendees and another three ventures
provided displays.

Investment perspectives on the recycling industry were
provided by representatives of Edison Venture Fund and Self-Help Ventures
Fund.

Wellman, Inc. was highlighted as a plastics recycling business success
story with major operations in the Southeast.

The forum provided opportunities
for recycling entrepreneurs to meet investors and economic development
officials who could assist the ventures with their financing and business
development needs.

Forum evaluations completed by attendees
indicated that 78% found the forum very valuable to them,17%
found it somewhat valuable and only 5% found it not at all valuable.

The Potential Benefits of Recycling Investment Forums

Recycling investment forums offer a range of potential benefits for the
recycling and financial industries by helping to:

Heighten the interest in recycling firms among investors and financial
institutions.

Educate investors on the variety of recycling investment opportunities,
and distinguish these opportunities from solid waste, environmental
and other types of ventures.

Educate recycling entrepreneurs and officials about the priorities
of investors.

Highlight barriers to recycling business expansion that public and
private policy or procedural changes could remedy.

Assist participating recycling firms in raising capital for business
growth and expansion.

Recruiting Presenting Businesses

Most of the investment forums and meetings described in Chapter 5 are
focused in a geographic or metropolitan region but are open to entrepreneurial
ventures from any type of industry. By focusing on only recycling companies,
recycling investment forums significantly narrow the field of potential
business participants. For this reason, the recycling investment forums
that have been conducted to date have been for regions comprising up to
ten states instead of for a single state or metropolitan area. By broadening
the geographic range for the company presenter applicant pool, forum organizers
can help to ensure that enough good quality companies can be selected
to be of interest to attending investors and economic developers. In addition
to expanding the geographic range, forums could be organized for a broader
set of industries including recycling companies, such as the manufacturing
or environmental industries. Again, this would provide a larger population
of firms from which the strongest companies seeking new capital could
be chosen.

Recycling investment forums should recruit the strongest recycling companies
with unmet capital demands in their geographic service area. In particular,
those states with active loan or grant programs should have a good sense
of the growing and reputable recycling firms within their borders that
are ready for an infusion of private capital. Promotional forum brochures
and presenting company applications can be disseminated through a range
of networks, including:

State and regional recycling market development officials.

State and local economic development agencies.

National, regional and state trade associations for recycling companies
and related materials industries.

Investor participants, sponsors and networks.

Business newspapers and publications in the targeted region.

Accounting and law firms that serve entrepreneurial companies.

Entrepreneurial, investor and business associations.

In addition to mailings to these businesses and associations, direct
phone contact should be made with the chief executive officers of those
companies identified as hot prospects by forum organizers. Start-up
companies in formation may not be on existing mailing lists but may offer
exciting emerging investment opportunities. Some enterprises may need
to be encouraged to apply if they are already actively raising capital.
The forum should be marketed as one component of a companys capital-raising
strategy, helping to facilitate face-to-face meetings with financiers
and providing contacts for future financing rounds.

From the experience of the first two recycling investment forums, it
appears that the company application rate is higher if application forms
are distributed along with forum brochures, rather than asking that companies
specifically request an application form. By receiving the application
form, an entrepreneur can immediately see the level of detail required
of the business and ascertain whether the forum may be an appropriate
activity for the firm.

The recruitment process for businesses and investors, especially for
a new event, will inevitably be an iterative process. That is, businesses
will be attracted by the investors that may be present and vice versa.
As business presenters are identified, some anonymous descriptions of
these businesses and their capital demands may be helpful to attract new
investor attendees interested in these business profiles. Similarly, businesses
will be encouraged to participate if they know that the event will be
attended by the types of financiers appropriate to their capital needs.

Selecting Presenting and Displaying Businesses

If businesses are allowed ten to fifteen minutes each to present and
four hours of business presentations are scheduled for a one day recycling
venture forum, up to sixteen businesses can be selected. The first Southeastern
forum had nine business presentations while the Northeast event had twelve.
Increasing the number of presentations beyond this range could result
in less attention paid to each presentation by the audience.

Aggressive recruitment and a rigorous selection process are necessary
to ensure that the best quality recycling ventures are presented at the
forum. As noted in the excerpts from the NERC brochure in Figure 4-2,
some of the initial screening criteria for applicants can include:

Do the companys activities qualify as recycling as defined by the
host organization?

Is the company located in or committed to opening a facility in the
targeted geographic area for the forum?

Is the enterprise seeking new outside capital for start up or expansion
of operations?

Has the company fully completed the application and attached a comprehensive
business plan or summary?

About The Forum...

Securing adequate capital can be difficult for both new and expanding
recycling businesses. These difficulties are compounded by the financial
communitys unfamiliarity with the recycling industrys evolving markets
and technologies.

The goal of the Northeast Recycling Investment Forum is to assist
recycling businesses in obtaining equity capital. The Forum is a one-day
event where recycling enterprises formally present their business plans
to an audience of prospective investors.

Recycling businesses are invited to apply for participation in the
Forum. The most qualified applicants will be selected to present at the
Forum by a committee of financial professionals. Their decisions will
be based on the business completed application forms and business plans.

Enhanced understanding of how to identify, approach and market to
investors.

Positive media attention for your company.

Who Shoud Apply?

Start-up and expanding recycling businesses seeking equity capital
should apply to participate in the Forum. To be eligible to participate,
businesses should be able to answer YES to the following questions:

Does your company operate or plan to operate a facility in the Northeast?

Is the primary purpose of your business to collect or process recycled
materials, and/or manufacture or sell products incorporating recycling
materials?

Does your company seek equity investments between $100,000 and $5,000,000,
and do you offer potentially strong investment returns?

Does your company offer unique products or services with documented
market opportunities and competitive advantages?

Does your company have strong, proven management or a plan for completing
the management team?

Does your company have a complete business plan?

The business presenter application form can be provided on paper or on
computer disk for the company to return to the forum organizer with a
completed business plan. The sections of the application for the Southeastern
forum included questions regarding:

Company and Management Information

Historical and Projected Financial and Employment Information

Company Products and Services

Professional Advisors

Assuming the applicants meet these initial criteria, applications and
business plans must be reviewed to select the companies most likely to
be attractive to investor attendees. Some existing forums have developed
formalized selection criteria. For example, the criteria and evaluation
weights by which submissions are judged for the Utah Venture Capital Conference
include:

Market and Marketing Strategy 35%

Management 25%

Products and Services 15%

Company History and Status 15%

Financial Summary 10%

The selection committee should be composed of individuals representative
of the target audience, so that the companies selected will likely be
of interest to attendees. Candidates would include representatives of
individual investor networks, investment partnerships, governmental finance
agencies, banks and other financiers who regularly review business plans.
Committee members must agree to recuse themselves from recommendations
in which they have a potential financial interest and to keep information
about company applicants confidential.

If the goal of the forum is to be successful in fostering access to capital
for the broad recycling industry, then the potential for investment success
should be the primary selection standard. Public policy goals, such as
the need for increased recovery of certain difficult-to-recycle materials,
should take a back seat in the selection process.

In addition to selecting presenting companies, the selection committee
may also decide to identify other companies not ready for center stage
at the forum but with promising investment potential. These displaying
companies could be allowed one page descriptions in the conference booklet
(see below) or table top displays at the forum event. Allowing displaying
as well as presenting companies to attend provides financiers with a wider
portfolio of ventures to review, including more early stage and small
deals. However, it is important to give the presenting companies the greatest
focus and access to investors.

Several important business characteristics to look for in company applications
were suggested by the investor interviews conducted as a part of the Recycling
Venture Forum Study, as presented in the What Investors Look for
in Companies list included as Figure 2-4 in Chapter 2, p. 12.

Polishing Company Presentations

Once presenting firms have been selected, forum organizers need to work
with the presenters to ensure the quality of their presentations. Organizers
should convene a training meeting to preview company presentations and
make suggestions prior to the forum.

This preparation, though demanding of company managements time, provides
excellent training for other presentations to investors, bankers, and
potential business partners. Presentations should cover some key areas
such as:

Business Description

Market Opportunity and Strategy

Management Team

New Capital Needed

Intended Use of Funds

Current and Projected Company Sales and Profitability

The first Northeast Recycling Investment Forum organizers conducted a
special presentation training session for all company presenters three
weeks prior to the forum. The training session was organized by NERC and
the Environmental Business Association of New York State and hosted by
Price Waterhouse in Boston. The session began with a review of key business
presentation skills. Then, each company made a trial business plan presentation.
Following their presentations, they were critiqued by an investor network
representative, an accountant, an investment banker and other company
participants. Feedback covered a range of areas including:

Time length of presentation

Contact and engagement with the audience

Content of the presentation-suggested additions and deletions

Improvements to the audiovisual presentation

Each of the companies also received a videotape of its presentation and
critique session.

By the time of the Northeast forum, companies had significantly improved
their presentations as a result of the training session. Indeed, several
of the entrepreneurs remarked that even if they did not find an investment
match at the event, the training session alone made their participation
in the forum worthwhile.

Both the forum presentations and the executive summaries of business
plans in the forum booklet will make important first impressions on the
audience. Forum organizers and presentation committee members should review
company materials for concerns such as the following:

Is the presentation overly focused on a technology that will bore
or confuse investors?

Is the verbal and audiovisual presentation concise, legible and professionally
prepared?

Recruiting Investor Attendees

One measure of the success of a recycling investment forum is the number
and types of registrants. Two categories of investor invitees are recommended.
The first priority invitees are those whose investment interests
seem to most closely match the capital demands of recycling companies.
The second priority invitees may be more appropriate for later
stage financing or are already easily accessible to the business through
local contacts.

Attracting strong attendance from targeted financial institutions and
investors is a challenge. For a new recycling investment forum, it is
important to establish credibility with investors through the name recognition
of hosting and sponsoring organizations, professionally printed materials
and referral from other peers in the field. Media coverage of the upcoming
forum in recycling, finance and business periodicals can also help to
establish credibility. Recognized keynote speakers who can address financier
interests, perhaps in regard to recycling and environmental industry trends,
could also be important. Finally, recruitment of top-notch presenting
businesses will help establish the forum as the place to be to see the
best recycling investment opportunities in the region.

Recruitment efforts for the two recycling investment forums conducted
as of the date of this publication included:

Compilation of investor and financier databases from multiple sources

Mailing of a Save the Date card three or more months before the
forum

Mailing of a registration brochure two months prior to the forum

Joint mailing and publicity with companion events

Joint mailing and distribution of the forum flyer through existing
venture networks and clubs

Fax of selected company descriptions and forum information sent to
a subset of the database two weeks prior to the forum

Media coverage sought and advertising purchased in publications read
by the target audience

The experience of the first two recycling investment forums indicates
that attracting sufficient investor attendance is the greatest challenge
in conducting a successful forum. The Southeast and Northeast forums attracted
100 and 150 attendees, respectively. These attendee totals were approximately
evenly divided among three categories:

Presenting and displaying company officials

Investors and financial institution representatives

Recycling, governmental and economic development officials and service
providers

In each of these first two recycling investment forums, investor attendance
was lower than hoped for by forum organizers, but sufficient for many
fruitful contacts to be made by entrepreneurs that may result in new investments.
In evaluations of the forums, company officials also mentioned the benefit
of the contacts they made with state recycling and economic development
officials and the other participating companies.

However, as new forums are organized, particularly in regions of the
country with a lower concentration of active investors in entrepreneurial
companies, special attention should be paid to the target audience. If
strong attendance by investors is not anticipated, the event can be more
designed to highlight its entrepreneurial training and economic development
educational features. With such a design and understanding by all parties,
a forum can be successful even if no new investments are a direct result
of the event.

Forum Agenda and Logistics

The venture forums and fairs and meetings listed in Chapter 5 vary in
length from a half-day to two days. Typically, those events with nearby
attendees have shorter schedules while the multi-state regional forums
may run longer, including receptions and dinners. A recycling investment
forum could be scheduled as a one- or two-day event, perhaps beginning
with an evening registration, reception and open display area, followed
by a full day of business presentations, meetings and the keynote speaker,
as shown in Figure 4-3.

Figure 4-3
Sample Recycling Investment Forum Agenda

DAY ONE

5-7 PM Arrivals, Registration

6-9 PM Reception with Company Displays

DAY TWO

9 AM Welcome, Sponsor Recognition, Business Presenter Introductions

9:30 AM-12:30 PM Recycling Venture Presentations (12 @ 15 min. each)

12:30-1:30 PM Lunch, Keynote Speaker

1:30-4 PM Ongoing Reception and Displays

Attendance may be enhanced if the recycling investment forum is conducted
in conjunction with another event that investors may be interested in
attending. For example, the first Southeastern Recycling Investment Forum
was scheduled immediately preceding the annual Dare to Deal venture capital
conference in Charleston. Few investors ended up attending both events,
since the programs and presenting companies were quite different. However,
the joint publicity and mailings helped lend credibility to the first
recycling investment event for the region.

The Northeast Recycling Investment Forum was held in conjunction with
the New England Environmental Expo. Forum attendees received free passes
to visit the expos trade show with its hundreds of environmental and
recycling companies displaying.

The space for the forum should allow for a large enough meeting room
or auditorium for company presentations to the entire audience. A display
area, with refreshments, should allow for attendees to examine company
products and information at their leisure. This reception area should
be near but not in the same room as the presentation area, to allow company
representatives and attendees to talk informally at times while other
presentations are being made.

Forum Registration and Attendance

Venture forums and fairs charge between $50 and $500 per registrant,
depending on the length of the event and the venue. The first Southeastern
Forum charged attendees $125 while the first Northeastern Forum charged
$250. The registration fee should help defray costs and communicate the
value of the event, yet not be prohibitively expensive for interested
parties.

Presenting businesses could be charged an application fee to help cover
the costs of reviewing the application and business plan and to help screen
for serious ventures. This initial fee can be deducted from the registration
fee if the company is selected to present or display.

The primary attendees at the recycling forum should be presenting company
representatives and interested investors, financing sources and economic
developers. Inevitably, other parties will be interested in attending,
including finance intermediaries, lawyers, accountants, other businesses
and recycling officials. Most venture fairs do not restrict admittance.
Some use color-coded name tags or ribbons and conference materials to
help identify presenting companies, sponsors, and investors. Seeking to
exclude interested observers could engender ill will and may also reduce
positive networking opportunities for businesses and investors. An open
door policy would also help the recycling forums to move toward sustainability
based on registration fees and sponsorships. However, certain securities
law precautions should be taken regarding attendees, as noted below.

A conference booklet should be printed for the forum and given to attendees
at registration. The booklet could include recognition of forum organizers
and sponsors. Summaries of any keynote talks could also be included. Short
business plan executive summaries for each presenting company in a standard
format should make up the bulk of the booklet. A schedule for presentations
should be included so that investors can easily follow the presentations
and have further details at hand. Short descriptions of the displaying
companies present at the forum could also be included. Finally, general
business or investment analysis reports regarding the recycling industry
can be included. Consistent with securities laws, after the forum the
booklet may also be made available to financiers who could not attend
the event, to widen the potential financing impact of the forum.

Forum Sponsorships

Forum sponsors can help fund the event and make it sustainable on an
annual basis. Well-known sponsors can also provide credibility for a first-time
venture forum. In addition to recognition in the forum booklet, printed
materials and at the event, sponsors at certain donation levels can be
provided with limited complimentary registrations to the forum. Sponsorship
levels at existing forums and fairs range from a few hundred dollars for
smaller events to $10,000 or more. Potential recycling investment forum
sponsors would include:

Sample Recycling Investment Forum Budget

A sample forum budget is in Figure 4-4. The budget assumes that the forum
host has access to significant volunteer assistance through the recycling
and financial industries. Volunteers could assist with company and investor
recruitment, business selection and presentation training. A start-up
grant is assumed for the first year of a forum. Registration and sponsorship
revenues could cover an increasing share of costs in future years, if
the forum is conducted annually.

The budget shown in Figure 4-4 is only an estimate. Costs will vary based
on the location for the event, its duration, staffing and contract costs.
If forum organizers and sponsors are able to supply significant in-kind
expertise and resources, costs can be reduced. If a forum is the first
event of its kind for a region or a hosting organization, expenses will
likely be higher.

Legal Precautions

Federal and state securities laws and regulations place restrictions
on individuals or organizations offering company securities for sale.
A securities lawyer should be consulted to provide guidelines for the
organization of any recycling investment forum or event so as to ensure
that the event is conducted in compliance with all applicable federal
and state laws. (See Chapter 3 for some of the restrictions placed on
companys or their agents regarding contact with investors, depending
upon the legal structure of the equity investment they are seeking.) The
information provided in this publication is not meant to take the place
of appropriate legal and accounting advice for either forum organizers
or participating companies or investors.

Several existing venture forums and fairs were surveyed for the Recycling
Venture Forum Study. Organizers of those events that were marketed
toward professional venture capital investors had fewer concerns about
securities laws because they expected a level of sophistication from their
accredited investors. Most had their own or a sponsors attorney familiar
with securities law review their event plans and suggest safe operating
guidelines. Those forums that involved individual investors took even
greater precautions to assure compliance with securities laws and regulations.

The Northeast Recycling Council received pro bono advice from a law firm
specializing in securities law for the Northeast forum. The firm recommended
that NERC include the statement shown in Figure 4-5 in its forum booklet
and included a similar statement in the registration brochure. Figure
4-5 is not meant to take the place of appropriate legal and accounting
advice for either forum organizers or participating companies or investors.

Forum Evaluation

Recycling investment forums can be evaluated based on the direct and
indirect benefits they may offer to participants and the recycling and
investment industries. Direct benefits result from the forums if new investments
are made in presenting and displaying companies as a result of the forum.
Organizers should make sure that companies agree on the application form
to disclose to the host organization their financing results for one year
after the event. With these disclosures, the direct financing benefits
of the forum can be evaluated.

Indirect benefits of the forums could occur if financiers become
more active in financing recycling firms, in general. Business applicants
could also benefit if through the application, presentation training and
forum process they develop a greater sense of investor priorities and
how their company can best access new capital. Finally, all attendees
and the general public, via press coverage and publications, can achieve
a greater understanding of the opportunities in financing innovative recycling
businesses.

These direct and indirect benefits can be measured through written surveys
of forum participants immediately at the end of the event and telephone
surveys of business presenters and forum attendees six months to a year
after the forum.

Limitations of Recycling Investment Forums

Recycling-specific investment forums are only one of many strategies
for fostering capital formation and entrepreneurial development in the
recycling industry. Forums as described in this chapter are most appropriate
when conducted for a relatively large area with significant numbers of
active recycling companies and interested equity investors. Prospective
forum organizers should team up with firms or organizations with experience
working with private investors, such as some of those listed in Chapter
5.

The start-up costs of organizing a new forum for an organization that
has not conducted such an event are significant. Significant work must
go into ensuring compliance with state and federal securities laws, as
well as into ensuring strong recycling company and investor participation.
Recycling market development officials should also focus on mainstreaming
recycling companies by connecting them with capital sources, investment
networks and events as summarized in Chapters 3 and 5.

Finally, for the recycling entrepreneur, participating in a recycling
investment forum is only one component of a capital-raising strategy.
Developing a complete business plan, assembling a management team and
business advisors, and beginning to build a viable company are all essential.
The opportunity to present at a recycling investment forum provides the
entrepreneur with one way to contact a new circle of potential equity
investors efficiently.

Conclusion

Venture forums and meetings are effective means of fostering investments
in new and expanding companies. If designed properly, recycling investment
forums promise to be an excellent vehicle for financing well managed recycling
companies. The forums also can educate the investment and economic development
communities about trends, challenges and opportunities in the growing
recycling industry.

The Northeast Recycling Investment Forum is an opportunity for recycling
businesses searching for financing to present their business plans to
an audience of investors. The Northeast Recycling Council, its consultants
and sponsors for the Forum, herein referred to as NERC, as the coordinators
of this event, are not functioning as securities broker/dealer or investment
advisers, and are not registered as such with the Securities & Exchange
Commission.

The company profiles in this forum booklet were provided by the participating forum businesses. NERC accepts no responsibility for and has not confirmed the
accuracy or determined the legal adequacy of any disclosures or other statements (including the company profiles), which may be made, either orally or in writing, by entrepreneurs or investors participating in the forum.

NERC has not examined and does not endorse or recommend any security
which may be offered for sale by entrepreneurs at the Investment Forum.
NERC makes no assurances to companies or investors regarding financing
or other outcomes of the Forum. Both entrepreneur and investor participants
agree to assume full responsibility for their representations and actions
in conjunction with the Forum.

All investors are encouraged to seek legal and other professional
counsel prior to making investments in the participating businesses
at the Northeast Recycling Investment Forum.

The information provided in Figure 4-5 is not meant to take the place
of appropriate legal and accounting advice for either forum organizers
or participating companies or investors.

NOTES:

Additional sponsors for the Southeastern Recycling Investment Forum
included the American Plastics Council, the Environmental Capital Network
and the National Recycling Coalition.

Additional sponsors for the Northeast Recycling Investment Forum included
the American Plastics Council, the Steel Recycling Institute, Boxborough,
MA, Waste Ages Recycling Times, Price Waterhouse LLP, the Rhode Island
Solid Waste Management Corporation and the New York State Office of
Recycling Market Development.